Stocks Close Moderately Lower Following Yesterday's Rally - U.S. Commentary

4/18/2012 4:24 PM ET

Stocks moved moderately lower over the course of the trading day on Wednesday, giving back some ground after ending the previous session sharply higher. While the markets showed a negative bias throughout the session, selling pressure was somewhat subdued.

The major averages saw some volatility in late-day trading but all finished the day in the red. The Dow fell 82.79 points or 0.6 percent to 13,032.75, the Nasdaq dipped 11.37 points or 0.4 percent to 3,031.45 and the S&P 500 slid 5.64 points or 0.4 percent to 1,385.14.

The pullback by stocks came as traders cashed in on the strong gains seen in the previous session, which drove the Dow up by nearly 200 points.

Lingering concerns about the financial situation in Europe may have led to the profit taking despite Tuesday's successful Spanish bond auction.

A negative reaction to the latest batch of earnings news also contributed to the weakness on Wall Street, with shares of Intel (INTC) falling by 1.8 percent after the semiconductor giant reported its first quarter results.

Intel reported first quarter earnings that exceeded analyst estimates on revenues that came in line with expectations. However, the company also provided disappointing gross margin guidance.

Shares of IBM (IBM) also ended the day in the red after the tech giant reported better than expected than first quarter earnings but on weaker than expected sales.

Meanwhile, internet media giant Yahoo (YHOO) moved to the upside on the day after reporting first quarter earnings and revenues that exceeded analyst estimates.

The lack of conviction shown by the broader markets may have been partly due to the lack of major U.S. economic data on the day.

Sector News

While many of the major sectors showed only modest moves on the day, significant weakness was visible among housing stocks. Reflecting the weakness in the housing sector, the Philadelphia Housing Sector Index tumbled by 1.9 percent.

Radian Group (RDN) helped to lead the housing sector lower after Moody's downgraded the company's senior debt rating. Shares of Radian ended the day down by 4.6 percent.

Significant weakness was also visible among networking stocks, as reflected by the 1.5 percent loss posted by the NYSE Arca Networking Index. Alcatel-Lucent (ALU) and Juniper Networks (JNPR) turned in two of the sector's worst performances.

Biotechnology, natural gas, and airline stocks also showed notable moves to the downside on the day, although selling pressure was relatively subdued.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved to the upside on Wednesday, benefiting from the overnight rally on Wall Street. Japan's Nikkei 225 Index surged up by 2.1 percent, while Hong Kong's Hang Seng Index advanced by 1.1 percent.

Meanwhile, the major European markets came under pressure on the day. While the U.K.'s FTSE 100 Index fell by 0.4 percent, the German DAX Index dropped by 1 percent and the French CAC 40 Index slid 1.6 percent.

In the bond market, treasuries moved moderately higher after ending the previous session in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.7 basis points to 1.982 percent.

Looking Ahead

Following today's lack of major U.S. economic data, traders are likely to keep a close eye on reports on jobless claims, existing home sales, and Philadelphia-area manufacturing activity on Thursday.

On the earnings front, American Express (AXP), eBay (EBAY), and Qualcomm (QCOM) are among the companies releasing their quarterly results after today's trading, while Bank of America (BAC), DuPont (DD), and Verizon (VZ) are due to report their results before the start of Thursday's trading.